Duke agrees to smaller rate hike

Duke agrees to smaller rate hike

Duke Energy in a settlement has agreed to a $119 million rate increase over two years, almost half as much as the utility originally proposed.

If approved, the increase for 540,000 households and businesses in South Carolina will take effect in mid-September.

The Charlotte, N.C.-based utility reached a settlement agreement with the state’s utility watchdog agency — the S.C. Office of Regulatory Staff — and a lineup of interveners that includes the leader of the S.C. Small Business Chamber of Commerce. The utility’s request for a $220 million increase, its third in three years, has prompted an outcry of opposition at a series of public hearings. About 1,700 people registered as opponents.

The proposed increase goes before the S.C. Public Service Commission in a hearing set to start July 31 in Columbia.

Instead of raising rates by an average of 15.1%, or $220 million, the settlement would increase rates in the first year by $80.3 million, or 5.53%, and $38.2 million, or 2.63%, the second year and beyond.

Duke’s original request would have raised a monthly residential bill for 1,000 kilowatt-hours to $118.28, an increase of $17.83 or 17.75%. In the settlement, a monthly residential bill in the first year would be $107.97, an increase of $7.52 or 7.49%, and the second year would be $110.76, an increase of $2.79 or 2.58%.

The settlement revenue increase is based on allowing Duke Energy a 10.2% return on common equity, or maximum profit margin. Duke had sought a return of 11.25%.

Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce, said his organization “negotiated a very good result for small businesses in the Duke service area,” with the settlement reducing the proposed increase from 14% to 3.42%. He said rates for small businesses would increase 2.29% the first year and 1.13% the second year.

“It is a 75.6% decrease in the proposed hike for small businesses,” Knapp said. He said the increase for large industries is 7.73%, down from 14.4% that was originally proposed.

The settlement agreement shows that the original request was too high and not justified, Knapp said.

Duke Energy spokesman Ryan Mosier said in an emailed statement that the “settlement by its very nature is a give-and-take process. Through hours and hours of negotiations, we have reached an agreement that allows us to effectively run our business while providing affordable, reliable service to our customers.

“The agreement achieves a balance between the concerns of our customers and the need to recover the investments we’ve made in the system,” Mosier said.